Dec 19, 2017

Old Mutual star Buxton looks to Jupiter trajectory

When 'star' fund manager Neil Woodford moved from the house of Invesco Perpetual to his own lowlier premises, followers brought him £2.4bn. And that is why Old Mutual was always going to sell its single-strategy fund business to the buyer alighted on by its own star, Richard Buxton. Mr Buxton, who built a stellar reputation managing money for Schroders, had long seen Old Mutual's demerger plan as a chance to run his own fund boutique, with his preferred private equity partner TA Associates. While few details accompanied Tuesday's announcement of a £600m deal with Old Mutual, Lombard suspects TA has agreed to a similar arrangement. Shore Capital analysts note that this makes the price 2.3 per cent of assets under active management, or about 11 times forecast earnings - and reckon that Old Mutual could have made more, suggesting £750m. Comparable valuations support that idea: Schroders' shares trade on 16 times earnings estimates, Jupiter's on nearer 18, and Mediobanca recently bought asset manager RAM for 13-15 times earnings. Even with three rival bidders - reported to be Carlyle, Challenger and Macquarie - Old Mutual's sale process was never going to be competitive with its star attraction already in TA's stable.

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